How does IKEA create value through AI? The 75-year-old retail behemoth is transforming from a clunky physical brand into one that naturally incorporates data into an enhanced customer experience, both in-store and online. Under the leadership of Chief Technology Officer Barbara Martin Coppola, Google alum, AI is at the core of IKEA’s mission of creating a better home-furnishing experience.
Owning the Technology
In 2019, IKEA acquired Artificial Intelligence and Augmented Reality startup Geomagical Labs to help improve its virtual home visualization tools. IKEA acquired Geomagical Labs just as top furniture companies including Wayfair, Pottery Barn, West Elm, Williams-Sonoma and Ashley Furniture were all investing in AR and AI visualization tools. Given that IKEA competes against digital-first organizations, some of which have no in-person presence whatsoever, IKEA’s investment in AI was aggressive and strategic.
The 2019 acquisition equipped IKEA with Geomagical Labs’s AI technology to launch a new generation of its IKEA Place app. The new version includes new features that combine Artificial Intelligence and Augmented Reality, which creates immense value for IKEA.
AI-Powered Furniture Shopping Experience
For example, IKEA Place users can point their smartphone camera at the corner of their living room. Based on IKEA home furnishing knowledge and behavioral data from all user experiences, the app will present the customer with product recommendations. The experience helps users to easily understand and visualize how, perhaps, a sofa fits into their living room, without entertaining an in-person visit to a local store. By marrying the in-person and digital experiences, IKEA augments the reality and brings the store to customers’ homes.
To provide another example of the value creation of AI at IKEA, users can also point their camera at any piece of furniture anywhere and be shown the most similar IKEA product instantly – this feature is not limited to the home and can be utilized anywhere. This means that the IKEA shopping experience effectively extends to encapsulate a customer’s whole life; it is boundless.
CTO Coppola’s decision to acquire Geomagical Labs to supercharge IKEA’s visualization was shrewd. Through this acquisition, IKEA not only evolves with AI opportunities, but they own the IP and technology itself. She notes, “IKEA has spent more than $200 million investing in or acquiring 23 companies to date,” she said, “both to make a positive contribution to the sector and fulfill Ikea’s vision. This will continue to be the case. Acquisitions and investments will not stop and will increase.”
Many more AI-driven features are in the pipeline for IKEA. If there is one thing that is clear, omnichannel, or meeting the customer where they are, is the modern model for furniture-shopping, especially as the boundaries between brick-and-mortar retailers and online retailers blur.
But with the brand embracing AI, there is one glaring risk: What is to come of the iconic IKEA brand? Worldwide, IKEA is a place for a fun day out with family. Kids can look forward to the in-person experience, playtime, and culture around building a better home life together. These are just some of the core elements of the brand that have kept IKEA in business for over 75 years. This brand story has remained robust even as tech giants have disrupted the space.
Historically, IKEA has not been associated with high-tech, never mind AI in their living rooms. Thus, the company should be careful not to isolate their base. They continue to focus on the people. In fact, the company is well aware of this risk, and it is taking steps to mitigate it, “In the bigger perspective, IKEA Place is not about AR or AI. It’s about making IKEA home furnishing expertise more accessible. To do so, we are looking into the newest technologies, not for the sake of technology, but to create a better everyday life for the many people.”
As IKEA considers organizational changes to achieve its aspirations, IKEA should be constantly engineering new and innovative ways to maximize their $200 million AI investments on their app and website. Perhaps there are features that could enhance the furniture rental experience powered by AI-sponsored data analytics. Perhaps AI customer service can make the chat feature more prominent to replicate the salespeople in brick-and-mortar stores. Given how much the company has invested in AI, IKEA’s AI future is limitless. The faster its digital transformation, the brighter it future. Having already embraced a digital-first model, this iconic furniture retailer is equipped to adopt AI-powered new features in IKEA Place with ease.
Lunny, Oisin. “How Mobile Technology And Deep Learning Brings The IKEA Showroom To Your Home.” Forbes, Forbes Magazine, 6 Apr. 2020, www.forbes.com/sites/oisinlunny/2020/04/06/how-mobile-technology-and-deep-learning-brings-the-ikea-showroom-to-your-home/?sh=2f894fb498ad.
IKEA. “IKEA Sparks Home Furnishing Ideas and Inspiration through Artificial Intelligence.” Newsroom, 24 Sept. 2019, newsroom.inter.ikea.com/news/ikea-sparks-home-furnishing-ideas-and-inspiration-through-artificial-intelligence/s/77ed5adf-d6bb-4262-90c0-61b02821d04e.
Lunden, Ingrid. “Ikea Acquires AI Imaging Startup Geomagical Labs to Supercharge Room Visualisations.” TechCrunch, TechCrunch, 2 Apr. 2020, techcrunch.com/2020/04/02/ikea-acquires-ai-imaging-startup-geomagical-labs-to-supercharge-room-visualisations/.